Landlord and tenant – Service charges – Reasonableness – Roof replacement – Appellant landlord seeking to include cost of proposed works to replace roof tiles within interim service charge payable by tenants – Leasehold valuation tribunal (LVT) disallowing cost of works as unreasonable on ground that tiles having at least one year’s life left – Whether LVT erring in approach to reasonableness – Whether entitled to take into account existence of sinking fund – Appeal allowed
The appellant was the landlord of a block of 48 flats; the respondents were the tenants of two of those flats. The appellant sought to recover £2,053.53 from each tenant for interim service charges for the year commencing June 2009. The greater part of that sum related to major works that the appellant proposed to carry out to replace parts of the roof of the block; the appellant had fulfilled its statutory consultation obligations in respect of those works, under section 20 of the Landlord and Tenant Act 1985, but the tenants had not responded to the statutory consultation. The appellant applied to the leasehold valuation tribunal (LVT), under section 27A of the 1985 Act, to determine the tenants’ liability to pay the service charges. Meanwhile, in November 2009, the LVT ordered the terms of the leases to be varied to provide for tenants to contribute to a sinking fund, intended to accumulate the necessary funds for any large items of expense. By the time the LVT determined the appellant’s application in 2009, the fund had not yet accrued sufficient funds to pay for the roof works.
In its decision, the LVT found that the roof tiles had another 12 to 18 months’ use and that it was not reasonable for the appellant to replace them at that time. It considered that a landlord, acting reasonably, should take into account the fact that a sinking fund was being built up in order to fund such works and should have regard to spreading the burden of major works over time. It concluded that the amount claimed in respect of the roof works was unreasonable, within the meaning of section 19(2), and limited the service charge recoverable in respect of each flat to £482.50 charged in respect of works to the stairways.
The appellant appealed, contending that the LVT had erred in its approach to reasonableness. It submitted that: (i) reasonableness depended on whether the works fell within a range of reasonable decisions, so that the fact that it might be reasonable to wait a short while before replacing the roof tiles did not render it unreasonable to replace them immediately; and (ii) the existence of a sinking fund was not a relevant factor when considering reasonableness, or, if it was, the LVT had attached too much weigh to it.
Held: The appeal was allowed.
A landlord had a wide discretion as to the programme of works to be adopted. The LVT’s conclusion that it was unreasonable for the appellant to re-cover the roof immediately had been reached in the light of its view that the tiles had another 12 to 18 months of useful life. Given the discretion allowed to a landlord as to the programme of works to be adopted, and in the absence of expert evidence apart from that of the appellant, which indicated that the roof tiles should be replaced, it had not been open to the LVT to find that the appellant’s decision not to defer the roof work was unreasonable: Westminster City Council v Fleury [2010] UKUT 136 (LC) applied.
The existence of a sinking fund was not irrelevant to the issue of reasonableness. When deciding whether proposed works were reasonable, there was no warrant for not considering any part of the factual matrix, with the weight to be given to each element of that matrix a matter for the tribunal to determine in the light of the evidence. None the less, the existence of a small sinking fund could not make the difference between the reasonableness of a decision to re-cover the roof immediately or to do so in 12 to 18 months’ time, by which time, as the LVT considered, the landlord might be entitled to carry out the works in any event.
Regarding the tenants’ failure to respond to the appellant’s consultation exercise on the proposed works, tenants should not ignore the statutory consultation process that had been established by parliament in order to ensure a degree of transparency and accountability when a landlord decided to undertake qualifying works: Paddington Basin Developments Ltd v West End Quay Estates Management Ltd [2010] EWHC 833 (Ch); [2010] 1 WLR 2735 applied. If tenants were unhappy about proposed works on which they had been consulted in that manner, they should make their concerns known to the landlord within the period of time specified in the landlord’s notice. In the absence of any objection during the consultation process, a landlord was entitled to conclude that there was no serious objection to the proposed works. The tenants’ duty to participate in the consultation process applied even if past experience suggested that any observations submitted by the tenants would be ignored.
The amount payable by the tenants of each flat by way of interim service charge for the year commencing June 2009 was determined at £2,053.43.
The appeal was determined on the written representations of the parties.
Sally Dobson, barrister
